Unlike commissaries (military grocery stores), exchanges, for the most part, do not receive any subsidies from the federal government and must operate on a for-profit basis. With the exception of a small number of military personnel detailed for duty with the exchange services, exchange service employees' salaries are paid from revenues generated from sales of merchandise and not from funds appropriated by Congress. Of course, exchanges are normally located on military reservations and, as a result, do not pay rent for the use of land. Exchanges' tax-exempt status (as an agency of the U.S. Government) also reduces certain operating expenses. While exchanges must pay for the cost of transporting goods within the continental United States, Congress appropriates funds to subsidize the transportation costs of American merchandise to overseas exchange locations so that such items are available and affordable to personnel stationed overseas.
Exchanges play an important role for U.S. military and Government personnel assigned overseas as they are often the only local source for American retail merchandise, such as clothing, electronics, books and magazines, fast food, etc. Exchanges also supply gasoline at prices roughly approximating those in the U.S., normally on a rationed basis, to overseas personnel for personal use, since fuel prices in most foreign countries (where U.S. military are stationed) are normally much higher due to local taxes.
AAFES and NEX have also established smaller field exchanges to provide troops with comforts and everyday items while deployed, even in combat zones such as Iraq and Afghanistan. NEX also operates small exchanges onboard seagoing vessels, manned by sailors in the Ship's Serviceman rating.
Most profits earned by the exchange services, after paying operating expenses, are used to support community activities aimed at improving morale among service members and their families.